Honeywell International Inc.
- Company Name
- Honeywell International Inc.
- Stock Symbol
- Class Period
- February 9, 2018 to October 19, 2018
- Motion Deadline
- December 30, 2018
- District of New Jersey
The complaint charges Honeywell and certain of its officers with violations of the Securities Exchange Act of 1934. Honeywell is a multinational conglomerate that makes a variety of commercial and consumer products and provides engineering services and aerospace systems. Honeywell previously owned Bendix Friction Materials (“Bendix”), a manufacturer of automotive, truck and industrial brakes. Despite known health hazards, Bendix used asbestos in its brake- and clutch-pad products until 2001. Honeywell sold Bendix in 2014.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding Honeywell’s business and operations, including that Honeywell’s Bendix asbestos-related liability was greater than initially reported and that the Company engaged in improper accounting practices in connection with its Bendix asbestos-related liability. As a result of this information being withheld from the market, Honeywell securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $160 per share.
On August 23, 2018, Honeywell disclosed that “the Company’s Bendix asbestos-related liability is estimated to be $1,693 million as of June 30, 2018. This is $1,083 million higher than the Company’s prior estimation.” Honeywell further advised investors that “Bendix asbestos-related insurance assets are estimated to be $187 million as of June 30, 2018, which is $65 million higher than the Company’s prior estimate.”
Then, on October 19, 2018, Honeywell filed a quarterly report on Form 10-Q with the SEC for the period ended September 30, 2018. In its quarterly report, Honeywell advised investors that the SEC’s Division of Corporate Finance had reviewed Honeywell’s prior accounting for liability for unasserted Bendix-related asbestos claims” and that “[o]n September 13, 2018, following completion of Corporation Finance’s review, the SEC Division of Enforcement advised that it has opened an investigation related to this matter.” On this news, the price of Honeywell shares fell $1.72 per share, or 1.11%, to close at $153.47 per share on October 19, 2018. Over the following three trading sessions, the price of Honeywell shares fell by an additional $7.87 per share, or 5.3%, to close at $140.72 per share on October 24, 2018.